Daily Archives: February 28, 2017

This video was recorded on Jan. 26, 2017.

Vincent Shen: For our finaltopic of the day,getting more high-tech, is the idea --and this is something that I think we had somepretty fun discussions about in the past -- of fast food workers going away. I thinkwe can't deny that calls for higherminimum wages or something that you seequite often in headlines. Even here in the D.C. region, the cityrecently approved a $15 minimum wage that willgradually reach that level by 2020 in the city. From what I could find for theindustry at a McDonald's,labor costs are a very significant piece of their cost structure,usually around 20% to 25% for these chains. What do you think? Howdo you think this is going to mold things?

Dan Kline:There'sgoing to be two phases of this. Thecurrent phase we're in now is Starbucks,Panera, Dunkin' Donutsthat are using technologynot to take employees out of stores,but to make stores more efficient.Chipotleis starting to do that. TheChipotle order app,where you can mobile order and pay, they're runningseparate lines. The line you see atthe front of the Chipotle where the person makes your food,in the back, there's another one of those. So, they'renot necessarily firing employees,or using less people in stores. They're putting more people into production.

That'swhat Starbucks is doing. So,instead of somebody having to take your orderin the line, they're making your drink,so people go through faster,the store serves more people. That's phase one. Phase two,you're going to start seeing the McDonald's of the world that have bigkitchens and don't need extra production help, they'regoing to start putting ordering in kiosks, and that is going to take their head count down. They'redoing that all across Europe and Canada. So,whereas there might be four or six cashiers, there might be 12 kiosks with one or two employees who are helping you through that,and maybe there's an extra customer service personfacilitating the process. And then,eventually, you're going to start to see, at the wealthier fast food chains, maybe fries atMcDonald's won't be made by human being. Maybe your Big Mac still will bebecause it's customizable and there's a lot to go into it. But, you'regoing to see less labor.I don't see any way around that.

Shen:Sure. Youbring up a really good point.It'll be very much a gradualtransition. Some of the examples you brought up in aMcDonald's with some of the self ordering kiosks, very popular, thePanera Bread we have across the street from Fool HQ here,also a similar situation, I think there's five or six tablets ready to go. Ithelps them turn down the staff.

Kline:Andthis has been happening for 20 years.I'm a slight bit older than you,and when I was a kid and you went to McDonald's and you ordered aCoke,someone poured a Coke. Now, most McDonald's haveCoca-ColaFreestyle machines,where not only do I have an enormous amount of choice --I can get diet vanilla root beer andmix it with Fanta orange if I want --all the person at the counter has to do ishand me a cup. So,this labor has been coming out of the fast food process inlittle ways for a long time. Andyou will start to see service being a premium,meaning Starbucks'willingness to have a person make your drink exactly the way you want it,where is Panera Bread just hands you acoffee cup, that's going to be a differentiatorfor some of these brands. So you may see fast casual concepts double down on people and actually charge more for the experience of getting your pizza not made by a robot pizza machine.

Shen:Lookinga little bit further ahead,we have some pretty big names in Silicon Valleyworking to develop better AI,better automation. Obviously,it seems like a very natural next step for that technology to beintegrated more and more into this industry, as we'vediscussed here.I guess I want to talk a little bit about some examples of some of the more high-tech stuff,still very much in the testing stages. One, I found that, for acompany we talked about just a few minutes ago with Domino's, this made me chuckle, they have their DRU, the Domino's Robotic Unit,which is essentially anautomated vehicle --but not a full size car. It has the capacityto hold as many as 10 pizzas in a heated compartment. It can handledeliveries within a 20 mile radius on a single charge. They'realready testing stuff like this.I think it's limited to New Zealand and Australia right now. They'vealso handled some issues with theft, withsecurity cameras, with the locked compartment. But it is, to me, aglimpse of the possibilities.

Kline:I thought you were going five years after thatin the future, where pizza robots are overlords.[laughs] Domino's has been very goodabout what I'll call the concept-car concept. When you go to an auto show andFordis showing anamphibious car that can fly and make you a latte,some of this Domino's technology,even as goofy as when they were delivering you pizzas viareindeer,it's just to get attention, butaspects of it are going to come out. I don't see a world in the near future whereautonomous pizza delivery cars are going to make a lot of sense in most markets. But,automating more of that process. There's no reason a man needs to take the glob of dough andput it into the pizza thing. That could absolutely be a machine that does that. So, you'regoing to see more and more of that. Andthat will make the process more efficient. And yeah,maybe in Manhattan, there'sgoing to be drones and robots. In very densely populated places, you'll see that. But I think a lot of that now is attention-gettinggimmicks. Domino's does not really intent --it's not cost effective to have a drone deliver me a small Cokeand a medium pizza.

Shen:So, last point here, you mentioned on the service side,having that human element be a differentiator, and how the next steps,it seems like right now, the ordering process is becoming automated. But with the food prep, it's still a challenge.I do want to bring up one example that shows that we are there,and it's just a matter ofreaching that mass scale. There's a company I found calledMomentum Machines, based in the West Coast, they garnered some buzzlast year in advance ofopening a restaurant with a robot that could flip 400 burgers an hour,cut your vegetables, and do quite a bit of that process,in terms of the burger prep. So,it really seems likeso many things right now are in the concept stage,and you'll get all these elements of itkind of like how you described, but for these trendswe talked about today, in terms of the competition, some of thediscountingissues thatthe industry faces,but also on the flip side, howthey're trying to tackle increasing costs andthings like that. It's really funny,how all this comes together.

Kline:It'sa question of cost. If you look at how McDonald's makes aMcCafebeverage versus how Starbucks does itversus how a local place does it,Starbucks is a little automated,McDonald's is basically push button, there's no barista,it's the same guy who makes your fries, makes your latte orespresso or whatever it is. But there's very few restaurant chains that canget to this quickly. So, if you are a McDonald's franchisee,and McDonald's comes to you and says, "Good news,you can eliminate 50% of your staff. Bad news, there's a $4 million investment toput in the automated burger machineand all of the other technology." So,this is going to be gradual. You're going to see,like I said before,maybe McDonald's, one of the more successful franchise models,might say to its franchisees "In 2018, you aregoing to automate making french fries and chicken McNuggets,and that's a $200,000 machine," orwhatever the number is. That's not going to fly atWendy'sorArby'sor any ofthe less successful, or aSubway, wherethe average franchise owner is making a nice salary, or if they'repaying a manager, they're making $40,000 to $50,000 inprofit. I'm sure some make more. They'renot going to be able to invest. So,this is going to happen,and I'm sure you're going to see some start-up money where it's a pizza place where there's no human,you put your money in and boop boopa robot makes you a pizza. Butit's not like, three years from now, you're going to go to the mallfood court and there won't be people there.

Shen:Yep,definitely lookingfarther out, for sure. Anything else that you would like to end on, in terms of, maybe, other trends that you're watching,things that aren't as prominent now but might be coming up down the line?

Kline:Yeah.I think there's going to be a lot of shake out. Wetalked about fast casual pizza,and I've written about fast casual burgers. There aregoing to be winners and losers in these spaces. There is absolutely room for aChipotle of pizzaand a Chipotle of burgers,and probably a number two and maybe even a number three company,but there's not room for 17. Andjust like we've seensome of the wannabe Chipotle knock-offs suffer,some of these companies are going to go away,or they're going to consolidate. You'realso seeing, in the step above that, in yourChili'sandRuby Tuesday, they'restruggling to find a business model. So,I think you're going to see a lot of restaurant closures. You saw a lot last year,whole chains going out of business. I think that'sgoing to continue, and maybe get worse.

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What Automation Can Mean for the Restaurant Industry - Motley Fool

As the technology for automated vehicles, or AVs, becomes increasingly developed, legal policies are being made to accommodate this new technology.

In recent years, car manufacturers have begun to include more automatic features in their vehicles to enhance both safety and style, and, according to researchers, it seems this is only the beginning of automation technologies. Because of this, government regulations are developing in response to potential risks or threats to human safety.

Jason Wagner, associate transportation researcher with the Texas A&M Transportation Institute (TTI), said automated cars range in capabilities depending on their specific degree of automation.

Automated vehicles right now have relatively low levels of automation, Wagner said. Theres classifications for talking about automated technologies. Theres six levels of automation, from 0 to level 5.

Wagner said the most highly automated vehicles that are currently commercially available are still relatively minor compared to what could be introduced in the future.

The most advanced ones that are on the market right now are at about level 2, Wagner said. Level 5 is a fully automated vehicle that can drive in all situations at or above the level of a human driver. Right now, automation is relatively simplistic and it can just do things like keeping pace with traffic or monitoring blind spots.

Ginger Goodin, director of the Transportation Policy Researcher at TTI, said there are several questions regarding the safe and practical applications of vehicle automation which have prompted government regulation of the technology.

What the federal government has done is put out some guidelines, saying, If youre going to develop these kinds of vehicles, there are certain criteria we want you to be considering. Like, what environment can it operate in? How are you going to protect data privacy? And what happens in a situation where the car cant negotiate whats in the driving environment? Goodin said.

Because automation is still relatively new, Goodin said policy makers are not yet able to anticipate every issue or hazard that could arise.

Were starting to do some explorations ourselves and were looking at the existing laws in the transportation code, Goodin said. Were thinking about this technology as we understand it, and as we read the code, we say, Okay, does the code still make sense if the operator is a self-driving car? When these laws were written, we didnt even know that these technologies were on the horizon. It wasnt considered.

According to William Kohler, senior counselor in the Corporate Finance Practice Group of Dykema, one of the major components of safe vehicle automation the communication between cars.

The National Highway Traffic Safety Administration is requiring that new vehicles, as they are manufactured, be equipped with radio frequency connectivity so that you can have whats called V to V vehicle to vehicle connectivity, Kohler said.

In concordance with Goodins uncertainty about the legal prospects of AVs, Kohler said right now it is too early to tell. Specifically addressing accidents involving automated cars, he is not sure how the situation would play out.

It would be a very complicated situation and the traditional legal framework wouldnt apply, Kohler said.

Kohler said they are looking to states which are already implementing policies regarding AVs to prepare for the future.

At the state level, were watching state laws very closely, Kohler said. Michigan just passed a very generous autonomous vehicle law that was signed by the governor, where the system is the operator of the vehicle. That would seem to relieve the owner of the vehicle from responsibility. You cant really call them the driver, theyre more of a passenger.

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Emerging regulations on automated vehicles focus on safety, potential risks - Texas A&M The Battalion

Ken makes a decent living operating a large harvester on behalf of farmer Luke. Kens salary generates income tax and social security payments that help finance government programmes for less fortunate members of his community. Alas, Luke is about to replace Ken with Nexus, a robot that can operate the harvester longer, more safely, in any weather, and without lunch breaks, holidays, or sick pay.

Bill Gates thinks that to ease the inequality and offset the social costs implied by automations displacement effects, either Nexus should pay income tax, or Luke should pay a hefty tax for replacing Ken with a robot. And this robot tax should be used to finance something like a universal basic income (UBI). Gates proposal, one of many on the UBI theme, allows us to glimpse fascinating aspects of capitalism and human nature that rich societies have neglected for too long.

The whole point of automation is that, unlike Ken, Nexus will never negotiate a labour contract with Luke. Indeed, it will receive no income. The only way to simulate an income tax on behalf of Nexus is to use Kens last income as a reference salary and extract from Lukes revenue income tax and social security charges equivalent to what Ken paid.

There are three problems with this approach. For starters, whereas Kens income would have changed over time had he not been fired, the reference salary cannot change, except arbitrarily and in a manner setting the tax authorities against business. The tax office and Luke would end up clashing over impossible estimates of the extent to which Kens salary would have risen, or fallen, had he still been employed.

Second, the advent of robot-operated machines that have never been operated by humans means there will be no prior human income to act as a reference salary for calculating the taxes these robots must pay.

Finally, it is hard philosophically to justify forcing Luke to pay income tax for Nexus but not for the harvester that Nexus operates. After all, they are both machines, and the harvester has displaced far more human labour than Nexus has. The only defensible justification for treating them differently is that Nexus has greater autonomy.

But to what extent is Nexus genuinely autonomous in a manner that the harvester is not? However advanced Nexus might be, it can be thought of as autonomous if and only if it develops consciousness, whether spontaneously or with the help of its makers.

Only if Nexus (like the Nexus-6 replicants in the 1982 film Blade Runner) achieves that leap will he have earned the right to be thought of as distinct from the harvester he operates. But then humanity will have spawned a new species and a new civil rights movement (which I would gladly join) demanding freedom for Nexus and equal rights with Kenincluding a living wage, minimum benefits, and enfranchisement.

Assuming that robots cannot be made to pay income tax without creating new potential for conflict between the tax authorities and business (accompanied by tax arbitrage and corruption), what about taxing Nexus at the point of sale to Luke? That would of course be possible: The state would collect a lump-sum tax from Luke the moment he replaces Ken with Nexus.

Gates supports this second-best alternative to making robots pay income tax. He thinks that slowing down automation and creating tax disincentives to counter technologys displacement effect is, overall, a sensible policy.

But a lump-sum tax on robots would lead robot producers to bundle artificial intelligence within other machinery. Nexus will increasingly be incorporated within the harvester, making it impossible to tax the robotic element separately from the dumb parts that do the harvesting.

Either the robot sales tax should be dropped or it should be generalized into a capital goods sales tax. But imagine the uproar against a tax on all capital goods: Woe betide those who would diminish domestic productivity and competitiveness!

Ever since the emergence of industrial capitalism, we have been terrible at differentiating between property and capital, and thus between wealth, rent and profits. This is why a wealth tax is so difficult to design. The conceptual problem of differentiating between Nexus and the harvester he operates would make it impossible to agree on how a robot tax should work.

But why make life under capitalism more complicated than it already is? There is an alternative to a robot tax that is easy to implement and simple to justify: a universal basic dividend (UBD), financed from the returns on all capital. Imagine that a fixed portion of new equity issues goes into a public trust that, in turn, generates an income stream from which a UBD is paid. Effectively, society becomes a shareholder in every corporation, and the dividends are distributed evenly to all citizens.

To the extent that automation improves productivity and corporate profitability, the whole of society would begin to share the benefits. No new tax, no complications in the tax code, and no effect on the existing funding of the welfare state. Indeed, as higher profits and their automatic redistribution via the UBD boost incomes, more funds would become available for the welfare state. Coupled with stronger labour rights and a decent living wage, the ideal of shared prosperity would receive a new lease on life.

2017/PROJECT SYNDICATE

Yanis Varoufakis is professor of economics at the University of Athens and a former finance minister of Greece.

First Published: Wed, Mar 01 2017. 12 11 AM IST

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How to offset the social costs of automation - Livemint

Forbes

Looking Ahead: Jobs That May Never Be Automated Forbes In a recent article, a few Forbes Technology Council members examined what jobs they think will be automated in the next five to 10 years. But what about the flip side of the issue: What kind of positions or work will be safe from the automation process?

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Looking Ahead: Jobs That May Never Be Automated - Forbes

Agriculture.com

Dawn Debuts Total Planter Automation System Agriculture.com Dawn Equipment Company came to the 2017 National Farm Machinery Show with a whole new automated planting system made up of three components active down pressure (ADP), active depth control (ADC), and an active closing system (ACS) that ...

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Dawn Debuts Total Planter Automation System - Agriculture.com

Economic inequality and the travails of the American middle class loomed large in the US presidential election.

From Trumps bombastic attacks on unfair trade deals and the worsening fortunes of the Rust Belt, to Sanders critique of crony capitalism and the disenfranchisement of the worse-off in society, the grievances of the so-called middle class fuelled populist rage.

In the past three decades, Silicon Valley and the San Francisco Bay Area have emerged at the forefront of disruptive innovation and unequalled wealth generation. The regions billionaires, ranks filled with the likes of Zuckerberg and Musk, have stormed Americas rich list and usurped thrones that once took generations to build.

It isnt just billionaires being created either. The last two decades of Silicon Valley is widely considered the greatest concentration of legal wealth creation in history.

The Bay Area as a whole, now boasts over 387,000 high tech jobs with an average salary standing at 116,000. San Jose and San Francisco now rank as among the wealthiest cities in the country on per capita terms, standing at 84,973 and 64,963 respectively.

The Bay Area is the world's start-up capital. Image: Paul.H

However, even as the region harnesses the awesome wealth-building power of disruptive technologies, its society is increasingly feeling the strains of inequality. According to a study by the California Budget Centre, San Francisco ranks as the most economically unequal region in the state, with the top one per cent earning 44 times the average income of the bottom 99 per cent.

Income growth has also significantly favoured the wealthy few with the top one per cent in the South Bay experiencing an explosive 248.8 per cent growth in wealth from 1989 to 2013, while the bottom 99 per cent only gaining 23.2 per cent.

Undoubtedly, with living costs skyrocketing and San Franciscos median home prices hovering at 866,000, requiring a minimum household of income of 205,000 and the requisite deposit just to be able to buy the average home, roughly 90 per cent of the population is priced out of home ownership, a critical vehicle of wealth consolidation.

A wonderful world... if you're rich enough. Image: Kitchen

What this translates to is an increasing struggle for the middle class, and particularly the lower-skilled, to even survive at the lowest threshold in society. San Francisco and San Jose rank as second and fourth on a list of American metros with the smallest middle class, standing at 47.4 per cent and 48.5 per cent respectively.

New York and San Francisco rank as the worst cities in which to live the American dream, according to a study by Redpin where the American dream consists a modest 1,480 square foot home, a car, education for your two children and a comfortable standard of living. The difference between the cost of living expenditures required to live the American dream in these two cities and the median income, came out as negative, at -72,194.66 and -29,379.46 respectively.

The study concluded that higher production cities on the coasts tended to harbour greater inequality, while the American Dream was far more attainable in inland cities where the cost of living was lower despite the lack of dynamic wealth building industries.

One of America's most common jobs, under threat. Image: Americantruckgroup

As the fourth industrial revolution is revving up, accelerating the use of robotics, artificial intelligence, autonomous vehicles, big data and the internet of things (IoT) in our daily lives, can the lessons of high tech regions such as the Bay Area teach us how technology may impact society?

This is a question that is in dire need of an answer.

As the election exposed the pain of deindustrialization and the loss of entire manufacturing industries, it is also clear that trade wars and tariffs would not only do little to bring back many of those jobs, but completely misses the trends set to revolutionize the role of technology in industry and our daily lives.

A robot revolution will dramatically replace jobs and perform tasks that humans currently do, from flipping burgers to driving trucks to caring for the elderly. While it is estimated that companies who ship jobs overseas save 65% of labour costs, the savings potential of switching to a robot workforce jumps to 90 per cent. In the next 20 years, it is estimated that 47 per cent of American workers are at risk of losing their jobs to a robot. The size of the robot industry is expected to reach 122billion by 2020 with an increase of productivity of above 30 per cent in many industries but just with fewer people earning a wage as a result.

The growth of automated vehicles is expected to destroy one of the most common jobs in the United States, and one that provides workers with little formal education a solidly middle class average salary of 34,500 that of the truck driver. Over 1.7million trucking jobs are likely to be eliminated in the next decade as the technology for autonomous vehicles and increasing connectivity make the position economically obsolete.

In addition, there are another 1.7 million drivers of taxis, buses and delivery vehicles who have already been hurt by sharing technologies such as Uber and Lyft, but may be made obsolete altogether by the growth of robotics and automated driving.

An elderly-care robot gets tested in Japan. Image: YouTube / Plastic Pals

As we enter a future where lower-skilled jobs are increasingly difficult to come by, while opportunity is increased astronomically for those who possess the necessary knowledge base, can we use hi-tech regional hubs such as the Bay Area as a bellwether of the direction our society is heading towards?

If so, this proposition should fill us with both great excitement and angst, as the potential for excellence has never soared so high alongside a lurking darkness of extreme social inequality.

Opportunity will come hand in hand with loss.

As the advancement of intelligent robots wipes out entire working-class professions, new ones, focussed on the creation, maintenance and logistics of this new infrastructure will be created. Service jobs requiring human judgment, ingenuity and connection will continue to thrive. But the minimum requirements for individuals to learn a living wage in a world of robots would be far higher than they are now.

However, as technology may make life more competitive, it will also be used to dramatically raise efficiency in industries, which may translate to far lower costs of living. From the construction of homes to the cost of deliveries, the age of robotics could significantly lower the cost of housing and consumer goods.

These possibilities present opportunities to harness technology to bring about tremendous gains in the quality of life for the average person, parallel to what weve seen in prior industrial revolutions. The transition however, will also come with growing pains as old industries are wiped out or remade.

San Francisco must learn to 'like' its tech overlords. Image: LPS.1

Technological innovation is a neutral variable. It can be used to greatly benefit mankind, or it can also cause tremendous suffering. How we respond to the likely social changes caused by disruptive innovation will be crucial.

The availability and accessibility of education for all citizens will be crucial in giving not only displaced workers, but also future generations the tools to compete effectively in a world where the barriers of entry will be significantly higher than they are now. A special emphasis on the STEM subjects will be crucial.

Additionally, marked changes are necessary to shift our education system from one geared to train workers, to one that creates entrepreneurs. A painfully large number in our society lack a keen understanding of entrepreneurship and how businesses function, while such skillsets tuned to adaptability would be critical to success in societies experiencing massive technological disruption.

Education and a frame of mind geared towards opportunity is key. A society in a fourth industrial world with large populations of undereducated people who lack the wherewithal to compete will inevitably face drastic social inequality and political turmoil.

Using tech cities as a bellwether is again useful.

Ooh look, houses you can't afford!Image: Urban

San Francisco in the past decades has witnessed increasing political tensions over housing, gentrification and class. Passionate battles have ensued over the role of tech companies such as AirBnB over housing, grumbling resentment over Google buses and gentrification, to public protests over evictions.

The percentage of Bay Area residents feeling that the region is headed in the wrong direction jumped to 39 per cent at the end of 2015 compared to just 29 per cent before even as the region experiences unprecedented wealth creation and robust economic growth.

From the experience of the San Francisco Bay Area, we can see that disruptive technology has the potential to create immense opportunities but also cause widespread pain when the relative living standards of a substantial portion of the population fails to keep up.

The municipal governments of the region have done well to foster environments where start-ups and entrepreneurs can succeed, but have fallen behind in reforming antiquated regulations and policies that have impacted the cost of housing or the ease of transportation that are necessary to keep the American Dream alive for the average citizen.

If there is one thing we can learn from the history of Silicon Valley it is that innovation will bring about change at a speed and scale far greater than we can imagine.

Tech cities should be regarded as the canaries in the coalmine; valuable testing grounds providing lessons in solutions that ensure disruptive innovation is being harnessed to create healthy and prosperous societies that improve the lives of the majority of its citizens.

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How can we stop automation causing unprecedented inequality ... - CityMetric